Proposal for a TOD Amendment to the BUILD Act

Illinois is facing a severe housing shortage. Governor Pritzker’s proposed BUILD Act is a critical first step, unlocking "missing middle" housing by allowing multi-unit developments on historically restricted single-family lots. Our analysis shows the base BUILD Act could unlock 113,200 new housing units across Chicago.

This proposal analyzes adding a Transit-Oriented Development (TOD) amendment similar to California's recently passed SB79.

The "Missing Middle" in High-Cost Areas

We analyzed the Zillow Observed Rent Index (ZORI) to identify Chicago's top 15 neighborhoods experiencing the most extreme rent spikes. Under the base BUILD Act, only 19.4% of new citywide housing capacity falls within these critical high-cost areas, despite them comprising 41.0% of the city's residential land.

Why? Because the most desirable, walkable neighborhoods in Chicago are desirable because they are already dense.

• In the Top 5 highest-rent-growth neighborhoods, 47.1% of the land is already zoned for multi-family housing.

• Across the rest of Chicago, that number drops to just 13.3%.

Because land acquisition costs in these highly restricted neighborhoods are high, developers cannot afford to tear down a $1.5M single-family home just to build a 3-flat. To unlock housing in high-opportunity, transit-rich areas, we must allow mid-rise density.

In the Top 5 most expensive neighborhoods, the base BUILD Act only upzones a potential 7,487 new units. Layering the CA SB79 transit density standard generates 69,627 units in those same neighborhoods.

The Solution: A California-Style SB 79 Amendment

By adopting a transit-oriented density model similar to California's SB 79, we can shift where housing gets built.

SB 79 effectively legalizes 5 to 10-story mid-rise apartment buildings, similar to the many courtyard buildings already built everywhere in Chicago, by guaranteeing baseline densities of 100 to 120 units per acre near high-frequency transit hubs. It overrides local exclusionary zoning and limits restrictive parking minimums, allowing dense, walkable communities in areas where the land values are highest.

If Illinois adopts a True CA SB 79 model allowing building near trains and bus intersections:

• Upzoning allows building 502,652 units.

• We unlock +389,452 additional homes compared to the base BUILD Act.

• The share of new housing built in Chicago's 15 most expensive, highest-rent-growth neighborhoods nearly doubles to 31.7%.

Economic & Fiscal Impact: The Property Tax Yield

Upzoning is also a fiscal boon. When we measure property tax yield per acre in Chicago's top 5 highest-rent neighborhoods, there is an obvious financial incentive for Transit-Oriented Development:

• Single-Family Home Zone: $302,400 in property tax revenue per acre.
• Pritzker's 4-Flat (Missing Middle): $453,600 per acre.
• SB 79 5-Story Mid-Rise: $810,000 per acre.

By allowing mid-rise buildings near transit, the city captures nearly 2.7x the tax revenue per acre compared to single-family homes, expanding the tax base without raising property tax rates on existing working-class homeowners.

New Affordable Housing Units

Chicago's Affordable Requirements Ordinance (ARO) requires upzoned properties to designate 20% of units as affordable. This upzoning permits 132,846 new units strictly in the 15 most expensive neighborhoods. This amendment would mandate the private construction of 26,569 permanently affordable homes in areas with the city's best schools, transit, and job access while costing taxpayers zero dollars.

Methodology: Defining "Feasible" Redevelopment

To ensure our model reflects real-world market conditions rather than purely theoretical maximums, a parcel is only counted as a "feasible un-built multifamily lot" if it passes a strict set of physical, legal, and economic filters:

• Zoning & Property Type: The parcel must be zoned for residential or commercial/mixed-use (excluding parks and manufacturing). It excludes existing condominiums, tax-exempt properties, and anomalies like "sliver" lots (assessed under $1,000).
• Age & Preservation: The existing structure must be at least 35 years old or an empty/low-value lot. It must also have fewer than 40 existing units to prevent modeling the demolition of large, currently viable apartment complexes.
• Meaningful Density Increase: The proposed development must at least double the existing unit count and increase total building square footage by at least 25%. The existing building must not already be hyper-dense (existing Floor Area Ratio < 1.5), and the lot must be 1 acre or smaller.
• Financial Viability (Pro Forma ROI): This is the most rigorous constraint. A parcel is only feasible if the projected revenue exceeds total project costs by at least a 15% profit margin. The pro forma components are calculated as follows:
  • Projected Revenue: Calculated dynamically using recent new-build condo sale prices specific to that exact neighborhood, multiplied by the legally allowed number of new units.
  • Acquisition Cost: The Cook County Assessor's estimated market value of the existing property, adjusted upwards by a neighborhood-specific multiplier based on recent real estate sales data to reflect true market rate.
  • Construction Cost: A graduated hard cost scale per unit reflecting real-world labor and material expenses (e.g., mid-sized and larger buildings trigger higher per-unit costs).

Transit Proximity Policy Options

We analyzed four different legislative requirements for triggering transit-based upzoning. We compared the base SB79 text (upzoning units near Trains OR Bus Intersections) to alternatives requiring varying levels of access to transportation.

(Note: Data filtered for financial feasibility. Parcels are only counted if the zoning allows a significant multiplier over existing capacity).

We calculated the following housing capacity increases for each proposal:

Use the layer toggle on the interactive map below to switch between the different transit-oriented density scenarios and see exactly how housing capacity shifts across Chicago's neighborhoods.

Map looks best on desktop.